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Freshmax invests in land and IP to secure premium position.

15/May/2019

The growth in Asia has presented huge opportunities for New Zealand horticulture to re-gear fruit production into proprietary varieties, with integrated fresh produce company Freshmax capitalising on what it describes as insatiable demand.

With more than 30 years of experience in fresh supply-chain management in New Zealand and Australia, Freshmax is heavily invested in production of apples, summerfruit, cherries, citrus, avocados and blueberries. Its supply chain infrastructure includes packhouses, trading and distribution facilities in New Zealand and Australia.

Freshmax New Zealand CEO Andrew Common told the MyFarm Investments 2019 Symposium that the southern hemisphere’s supply of produce is not meeting the growing demand from the 88% of the world’s population that live in the northern hemisphere.

“There has been a lot of talk about New Zealand’s growing reliance on Asia, but the fact of the matter is, New Zealand’s success in horticulture has been strongly tied to growth in Asia. New Zealand has managed to quickly take advantage of the demand for fruit from aspirational Asian consumers wanting high quality and safe produce. More so than our competitors.”

Common says Freshmax is responding the demand growth by investing in land, post-harvest and IP across high value categories – apples, cherries, avocados and blueberries.

Apples present a great story at the moment for multiple reasons. “First, the competition is declining. In recent years Chile has produced fewer apples, and the total volume of apples in the southern hemisphere has fallen. However New Zealand production has increased.”

Meanwhile the reputation for New Zealand apples has grown. New Zealand apples has been voted 1st by the World Apple Review for the past four years.

This has been aided by production increasingly focused on proprietary varieties, with the results of Freshmax’s investment in IP coming through now in growing supplies of the Dazzle apple and the Piqaboo pear, accompanied by compelling brand stories.

Common points out that capital land values in apple growing areas have increased by over 1000% in the past 10 years as a result of the higher returns obtained from protected varieties coupled with investment in intensification

Common is also enthusiastic about cherries. With support from MyFarm, Freshmax has launched a cherry orchard development in Central Otago where customers are associating the fruit with high quality and high flavour. “Cherries from Central Otago are regarded as the champagne fruit of the category based on colour, taste, firmness and also timing.” The harvest in Central Otago is perfectly timed to suit the Chinese New Year gifting season.

Avocados presents further opportunities for New Zealand.

There have been some concerns about market saturation given the extent of plantings in recent years. However Asian demand has lagged and the reputation of avocados as a desired millennial food is starting to reach China. Common says consumption of avocados in China and South Korea is only about 7% – 8% that of Australia.

Several production-based advantages means New Zealand is well placed to succeed. “New Zealand being sub-tropical means our fruit doesn’t ripen on the tree so we can hold our crop longer than most, and means our selling window is longer than anywhere else. New Zealand can take advantage of favourable market conditions when they present themselves.

New planting in Northland is providing additional value with the environment less susceptible to production having on-off years.

Common noted that investing in horticulture is not without risks in New Zealand, with the constant threat of biosecurity incursions together with issues around labour shortages, access to water, disruptive technology and potential disruption to global trade. However these are risks that growers are long-used to adapting to and have successfully mitigated in the past.